Evans-Pritchard has always been quite a critic of the Euro-project, but in this last post he very succinctly points out what are the problems:
1. Contractionary policy is contractionary, especially in a depression fical multipliers are much bigger in a bad way than assumed before – even the IMF admits this.
2. Germany has a large trade surplus
3. There is a very big currency exchange difference between North and South Europe
4. Germany is stuck in some ‘pre-modern form’ of economic thinking
5. Regarding how things are going, there is no rationale anymore for the EMU, because it is dysfunctional and killing societies.
So, what is going to happen? Will countries just wait until they can’t take it anymore? Will Finland leave first? Will Germany? Who knows? The only thing that is clear is that the designers of the Eurozone have failed miserably on many aspects, as well as the people after them who were supposed to be smart enough to deal with a complex system like this. These people, from all over Europe, all political colours (nearly) should not be allowed anymore to engage in any kind of public policy anymore. Responsibility for their works please!